Corporate Innovation & Excellence: Experiences and Insights of the 2013 Editor's Award WinnersHelen Sanders, Editor, TMIThe Editor reviews the experiences of some high achieving treasuries we featured in 2012 - and selects her award winners for the best case studies in our seven Corporate Award categories.

by Helen Sanders, Editor

January is a time to look back over the past year and look forward to the next, to consider what lessons can be learnt, how things can be improved, and what new opportunities might exist. It is therefore an ideal time to review the experiences of some of the high achieving treasuries that we featured in TMI during 2012, to help inform how corporate treasurers and finance managers deal with the issues and challenges that they are likely to experience in the coming year. In this article, therefore, we are delighted to feature the winners of the TMI 2012 Editor’s Awards for Innovation and Excellence.

Award winners are selected from case studies published during the course of 2012. Unlike other award programmes, we do not routinely award winners in every possible category, preferring instead to recognise specific achievements of outstanding companies. During 2012, corporate case studies featured in TMI showcased achievements across the corporate treasury community, particularly in cash management. Not only do award winners demonstrate innovation and excellence in the way that they have addressed their own business challenges, but by sharing their experiences frankly and openly, they are also deepening the treasury knowledge base as a whole.

Cash Management: GlaxoSmithKline plc (edition 208, September 2012)

Sarah-Jane Chilver-Stainer, Senior Vice President and Group Treasurer

The Award for Cash Management was very competitive this year with a variety of excellent contributions to TMI over 2012. Finally, we selected GlaxoSmithKline (GSK), one of the most respected corporations globally providing pharmaceuticals, vaccines and consumer brands that improve the quality of life for people in every country. An essential way in which GSK is able to maximise its investment in research and development and continue pursuing its aim to eliminate malaria, is to be able to channel surplus cash from around the world to the parts of the group where it is needed most, and driving down the costs to end consumers by reducing the cost and overall levels of borrowing. To achieve this, treasury embarked on a cash and treasury optimisation project. Initially, the project focused on Europe, alongside banking partner Deutsche Bank, but ultimately it will be rolled out globally.

GSK has centralised its treasury activities into a centre of excellence in London, with five key areas of expertise: corporate finance; group treasury; cash management; pensions and insurance. This made it easier to implement its cash management project, with the following objectives:

Optimise return on cash by consolidating balances across the group

Minimise local overdraft fees

Create economies of scale by negotiating bank charges at a regional level

Standardise bank connectivity

Implement an in-house bank based on the new ERP platform.

The first step was to appoint a regional banking partner. In the past, treasury had a policy of one bank relationship per country, but realised that a regional, and ultimately global approach to cash management would enable the company to achieve its cash and liquidity management objectives more successfully. Conducting the selection process in the right way was very important, as Sarah-Jane Chilver-Stainer explains,

“Although we had identified a series of selection criteria in treasury, it was essential that we gained support from business units to appoint an alternative bank and to change the way that cash management was conducted.”

Having made the decision to appoint Deutsche Bank, based on the bank’s ability to meet its criteria, the project proceeded quickly, as the negotiation of fees and legal documentation had been done as part of the selection process. GSK has migrated to Deutsche Bank in most parts of Europe, and a single bank model will also be rolled out in Asia Pacific and other regions. A euro-denominated cash pool into which balances are swept daily is in place, so that euros are not held outside the UK, which has been particularly important during a period of extreme market uncertainty. An overlay cash pool is also in place in Central & Eastern Europe.